Deutsche Börse and Dow Jones have both released new short selling versions of their flagship indexes today. The Dow Jones Euro Stoxx 50 Short Index and the Deutsche Börse Short Dax both replicate short investment strategy and offer investors a way of achieving positive returns in downwards markets.
The Deutsche Börse press release said of the Short Dax index: “This makes Deutsche Börse the first index provider in Europe to develop an effective short strategy in the form of an index.” If it was indeed the first, it was only a matter of minutes until Dow Jones released its own version of the strategy.
Copy cat tactics are common in the index world. Although it still seems remarkable that both would introduce the same strategy on the same day. Perhaps it’s not that amazing though. FTSE, for one, told me in December that they can produce an index within 3 days of concept creation.
Then again maybe its just a coincidence borne out of demand for short selling strategies and a sign that many are getting nervous about a down turn in equity markets in 2007. Structured products linked to short selling strategies certainly look an ideal way for investors to diversify against a fall in equity markets. So in spite of the launches stealing one another’s thunder, it seems assured that licenses will be sought on both new indexes.
Such releases may all be in vain for the index providers – for structured products revenue at any rate. Sorry to be vague but keep an eye out for Structured Products magazine’s March cover story to find out why.
DANIEL SHEEHAN